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Whats in the Cards for TransDigm Group (TDG) Q1 Earnings?

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TransDigm Group Incorporated (TDG - Free Report) is set to report first-quarter fiscal 2019 results on Feb 5, before market opens.

In the last reported quarter, the company witnessed a positive earnings surprise of 3.98%. It surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with average positive earnings surprise of 0.31%.

Let’s see how things are shaping up prior to this announcement.

Factors Under Consideration

TransDigm Group has been riding on robust momentum, driven by complementary acquisitions, positive industry trends, solid operational execution and steadily growing end markets. These are likely to boost the company’s operating profit and bottom-line growth in the to-be-reported quarter as well.

Commercial after-market sales, which constitutes around 70% of TransDigm Group’s total revenues, have been consistently boosting the company’s top-line performance. With rapid increase in global trade activity significantly driving air passenger growth and freight traffic, the momentum is expected to bolster the company’s sales in fiscal 2019 first quarter.

In line with this, during the fiscal fourth-quarter earnings call, TransDigm Group increased its commercial aftermarket revenue growth expectations for fiscal 2019. We may expect the upcoming quarterly results to significantly reflect these top-line traits. In fact, the Zacks Consensus Estimate for first-quarter fiscal 2019 revenues is pegged at $947 million, mirroring an annual improvement of 11.7%.

Such solid revenue growth expectation along with favorable impacts from the U.S. tax reforms is anticipated to aid the company’s bottom-line performance.

Considering these factors, we may expect first-quarter fiscal 2019 results to duly reflect improved earnings for the company. The Zacks Consensus Estimate for earnings stands at $3.35 per share, reflecting an annual improvement of 27.9%.

Earnings Whispers

Our proven model does not conclusively show that TransDigm Group is likely to beat on earnings this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you see below.

Earnings ESP: TransDigm Group has an Earnings ESP of -7.07%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: TransDigm Group currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Transdigm Group Incorporated Price and EPS Surprise

 

Transdigm Group Incorporated Price and EPS Surprise | Transdigm Group Incorporated Quote

 

Recent Defense Releases

Textron (TXT - Free Report) reported fourth-quarter 2018 adjusted earnings from continuing operations of $1.15 per share, which surpassed the Zacks Consensus Estimate of 98 cents by 17.3%. The bottom line also surged 55.4% from 74 cents in the year-ago quarter.

Hexcel Corporation (HXL - Free Report) reported fourth-quarter 2018 adjusted earnings of 82 cents per share, exceeding the Zacks Consensus Estimate of 80 cents by 2.5%. Further, the bottom line improved 17.1% from the prior-year quarter’s 70 cents.

An Upcoming Defense Release

Huntington Ingalls Industries (HII - Free Report) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +7.09% and a Zacks Rank #3.

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